Start Up Financing

When starting a business, your first investor should be yourself—either with your own cash or with collateral on your assets. This proves to investors and bankers that you have a long-term commitment to your project and that you are ready to take risks.

This is money loaned by a spouse, parents, family or friends. Investors and bankers considers this as “patient capital”, which is money that will be repaid later as your business profits increase.

When borrowing love money, you should be aware that:

  • Family and friends rarely have much capital
  • They may want to have equity in your business
  • A business relationship with family or friends should never be taken lightly

The first thing to keep in mind is that venture capital is not necessarily for all entrepreneurs. Right from the start, you should be aware that venture capitalists are looking for technology-driven businesses and companies with high-growth potential in sectors such as information technology, communications and biotechnology.

Venture capitalists take an equity position in the company to help it carry out a promising but higher risk project. This involves giving up some ownership or equity in your business to an external party. Venture capitalists also expect a healthy return on their investment, often generated when the business starts selling shares to the public. Be sure to look for investors who bring relevant experience and knowledge to your business.

BDC has a venture capital team that supports leading-edge companies strategically positioned in a promising market. Like most other venture capital companies, it gets involved in start-ups with high-growth potential, preferring to focus on major interventions when a company needs a large amount of financing to get established in its market.

Business incubators (or “accelerators”) generally focus on the high-tech sector by providing support for new businesses in various stages of development. However, there are also local economic development incubators, which are focused on areas such as job creation, revitalization and hosting and sharing services.

Commonly, incubators will invite future businesses and other fledgling companies to share their premises, as well as their administrative, logistical and technical resources. For example, an incubator might share the use of its laboratories so that a new business can develop and test its products more cheaply before beginning production.

Generally, the incubation phase can last up to two years. Once the product is ready, the business usually leaves the incubator’s premises to enter its industrial production phase and is on its own.

Businesses that receive this kind of support often operate within state-of-the-art sectors such as biotechnology, information technology, multimedia, or industrial technology.

Bank loans are the most commonly used source of funding for small and medium-sized businesses. Consider the fact that all banks offer different advantages, whether it’s personalized service or customized repayment. It’s a good idea to shop around and find the bank that meets your specific needs.

In general, you should know bankers are looking for companies with a sound track record and that have excellent credit. A good idea is not enough; it has to be backed up with a solid business plan. Start-up loans will also typically require a personal guarantee from the entrepreneurs.

An Important Career Finance

Industrialization, globalization, and liberal policies of government about foreign direct investment in recent years have generated tough competition between companies to maximize profits. In order to survive in highly competitive market companies needs to reduce overhead cost, pay back maximum return to investors and attract potential buyers as well as to retain them. Healthy finance is the key for growth of any individual or organization. To compete with peer group companies, in industry, one needs to put oneself up ahead of others. All this created needs of eligible finance professionals to manage finances, minimize losses and maximizes profits.

There are many paths in academics following which one can become part of finance industry. Students can pursue graduation and post graduation in finance related disciplines like accounts, commerce, business, economics, statistics etc and further start work in finance and investment sector. Another option is to obtain technical professional qualification in finance like MBA Finance or Obtain CFA Certification etc to be part of Finance industry. Entry into finance field is open to both commerce and non commerce stream students.

To start work in industry in core financial capacity like Financial Manager etc one needs at least post graduate degree in finance. MBA Finance is one such course which helps you in getting job as Financial Manager in a company. Students with post graduate degree in MBA Finance i.e. Financial Management can get work opportunities with government and public sector companies as finance officer, risk manager, insurance manager, treasures, manager finance & accounts, to name a few. Though, designations may vary according to company profile. Companies also hire financial managers as consultants who advise senior managers on various business issues. Government also receives advice from financial experts in various issues related to finance and investment.

These are professionals who provide valuable information about financial records of a company. A chartered account is called ‘watch dog’ of a company who always tries best to save the organization from possible financial hazards if crisis occurs. These professionals also helps in financial and budget and taxation planning in a great way. To start career as chartered accountant in India one needs qualification from Institute of Chartered Accountant of India (ICAI). The institute offers course Chartered Accountancy (CA) to under graduate and graduate students. CA is professional qualification as well as post graduate qualification

Finance And Accounting

Finance and Accounting are two separate disciples that often are lumped together (as we obviously have done). At a high level, Finance is the science of planning the distribution of a business’ assets. Accounting is the art of the recording and reporting financial transactions. People tend to group Finance and Accounting because both functions deal with the administration of a business’ assets.

Those who work in the financial department of a business are concerned with planning the distribution of the business’ assets. This includes the coordination of capital investments and debt backed investments for the purpose of improving the value of the business. Those in Finance also plan the exit strategy for the investors of the business, which is the way in which those that invest in the business receive their financial reward. The financial goals and objectives of the business are designed by the business’ Chief Financial Officer, who is supported by people focused on Financial Analysis, Financial Management, Budgeting, Purchasing, and Accounting.

Those who work in the Accounting function of a business are concerned with tracking and reporting the financial transactions of a business. Those in the Accounting field are responsible for managing the general ledger, cash flow management, collections, recognizing revenue, analyzing profitability, reporting earnings, managing debt, and—of course—paying taxes. Accountants research and report the financial transactions and health of the business using a standard set of rules and principles, known as the Generally Accepted Accounting Principles (GAAP), as well as Section 446 of the Internal Revenue Code. Jobs in the Accounting function include Financial Reporting Accountants, Auditors, Bookkeepers, Accounts Receivable Clerks, Accounts Payable Clerks, Controllers, Treasurers, and Tax Accountants. Typically, the entire Accounting organization will report into the Chief Financial Officer.

Broadly speaking, Finance revolves around planning future financial transactions while Accounting revolves around reporting past financial transactions. While these are two separate functions that require different skill sets, they do both revolve around the management of assets; therefore, they are grouped together more often than not.